How To Open Demat Account?

Trading in the share market has been popular for a very long time. In the good old days, the buying and selling of shares were done physically and the process involved quite a lot of paperwork. But ever since the advances in technology and internet accessibility, trading has become much simpler. One of the most commonly heard terms while trading the share market these days is Demat Account. In today’s time, having an active Demat account is mandatory and without it, it is almost next to impossible to hold any securities in your portfolio. One of the most asked questions to financial experts is, how to open Demat Account? But before knowing the process of opening the account, it is important to know what does a Demat Account.

What is a Demat Account?

Introduced the Indian share market in the year 1996, a Demat Account or a Dematerialised account is very similar to your bank account. It was introduced to eliminate the risks associated with paper certificates. It is an account the can hold your shares and securities in an electronic format. The sole purpose of opening a Demat Account is to hold shares that have been purchased or dematerialised. Opening a Demat Account makes online trading of shares very simple. There are various advantages of opening a Demat Account. Viz, Security of shares, protection from forgery or theft, smooth trading and transfer, lower cost and multiple access points.

What is Dematerialisation?

The next question that comes to mind is, what is dematerialization? Dematerialisation can be explained as the process of converting physical shares into electronic format. To able to do that, the trader needs to open a Demat account with a depository participant or DP. In addition, if the trader owns any shares or securities in physical form, he or she can convert them into electronic format by simply opening a Demat account and yielding the physical shares.

By now we have discussed enough about the Demat Accounts for you to gain some basic knowledge about them. Let us now discuss how to open Demat Account. The process is fairly simple and requires that follow a few steps.

Step 1: Firstly you need to select where you want to open a Demat Account and afterward select the Depository Participant you want to open Demat account with. These amenities are commonly offered at most brokerages and financial institutions.

Step 2: You will then come across a form to open an account. You need to fill the form and submit it on time along with all the essential documents and a passport-sized photograph. You will also require your PAN Card to complete the process.

Step 3: You will be provided with a copy of the rules and regulations, the terms of the agreement and the charges that you will have to pay. Go through the details properly before agreeing and signing any document.

Step 4: In-person authentication is a vital part of the process. A member of the Depository Participant’s staff will get in touch with you to verify the details you provided in the account opening form.

Step 5: Once the verification is complete and the application is processed, you will be provided with a Demat Account number and a client ID by the Depository Participant. With the help of the account number and ID provided to you, you can access your Demat account online anytime and anywhere.

Opening a Demat Account is not complicated at all. But it also includes some basic charges like the annual maintenance charges, opening charges, safety charges (custodian fees) transaction fees on a regular basis and in some cases dematerialization charges. These fees may vary depending on the service provider you select. Take some advice from a financial expert about trading and open your very own Demat Account today.